Alternatives 1 and 2 in the Following Payoff Table Represent

question 14

Multiple Choice

Alternatives 1 and 2 in the following payoff table represent the two possible manufacturing strategies that the EKA manufacturing company can adopt.The level of demand affects the success of both strategies.The states of nature (S_I) represent the levels of demand for the company products.S₁,S₂,and S₃ characterize high,medium,and low demand,with probabilities of .3,.6,and .1,respectively.The payoff values are in thousands of dollars. $\begin{array}{lccc} &&\underline{{\text { States of nature }}} \\& s_{1} & s_{2} & s_{3} \\\text { Alternative (strategy) } 1 & 110 & 80 & 70 \\\text { Alternative (strategy) } 2 & 60 & 120 & 50\end{array}$


The management believes that the weather conditions significantly affect the level of demand.48 monthly sales reports are randomly selected.These monthly sales reports show 15 months with high demand,28 months with medium demand,and 5 months with low demand.12 of the 15 months with high demand had favorable weather conditions.14 of the 28 months with medium demand had favorable weather conditions.Only 1 of the 5 months with low demand had favorable weather conditions.What is the maximum amount that the company would be willing to pay for perfect information?

• A)$95,000
• B)$112,000
• C)$7,000
• D)$24,000
• E)$17,000

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Definitions:

Landscape Painting

A genre of painting that depicts natural scenery such as mountains, valleys, trees, rivers, and forests, emphasizing the beauty of the natural world.

Colorist Painting

A style of painting where color is the main focus, often used to convey emotions and atmospheres.

Form and Line

Fundamental elements of design and visual art, where "form" refers to the shape and structure of objects and "line" to the continuous mark or edge defining those forms.

Ingres

A French Neoclassical painter, renowned for his precision in drawing and clear line, as well as his masterful portrayal of the human form.